Be careful with this one: April 16, 2001
In Part I of this series we looked at what several online “newsletters” have been writing about Silverado Gold Mines, Ltd., an OTC Bulletin Board company that says it is poised to offer a new economical and environmentally friendly fuel called Low-Rank Coal-Water Fuel (LRCWF). But LRCWF is not a novel concept. In fact, Silverado has been talking about the new venture for almost a year – long before the “newsletters” began to distribute their reports.
Looking for New King Coal
Scientists have been investigating and developing uses for LRCWF for many years. In fact, Dr. Warrack G. Willson, who now heads Silverado’s Fuel Technology Division, has written extensively about LRCWF since at least 1989 when he presented a paper to the “15th Biennial Low-Rank Fuel Symposium. Evidently, such symposiums were already in vogue back then. Indeed, if the 15th such conference was held in 1989, earlier biennial meetings would have dated back as far as the 1960’s.
Dr. Willson has not been the lone voice in the LRCWF wilderness. The University of Alaska at Fairbanks has been involved in a number of studies of LRCWF, including something called the “Clean Coal Demonstration Project.” Begun in the mid-1990’s, that project, which is sponsored by the U.S. Department of Energy, calls for “the assembly of a proving facility for the commercial demonstration of a Low-Rank Coal-Water Fuel (LRCWF) production and utilization technology.” According to the information we have reviewed, the site for that facility is the University’s Fairbanks Power Plant and 30,000 tons of coal for that project is to be provided by Alaska’s Usibelli Mining Company - not Silverado.
With other companies, agencies and research facilities exploring uses for LRCWF, where does Silverado stand? Are the Company’s plans up and running, or just running in place? Although the proliferation of “newsletter” reports is apparently recent, Silverado has been talking about LRCWF for at least a year. On May 4, 2000, it announced plans to establish a “production facility” for “a new, low-cost, environmentally friendly liquid fuel” which could serve as a “replacement for oil in areas such as the Pacific Rim.” According to that press release, the fuel had been “validated in pilot plants in Australia, Japan and the United States.” The Company indicated that it would be working with The University of Alaska’s Mineral Industry Research Laboratory; Great Northern Energy; and Coal Water Fuel Services, a company founded by Silverado’s Dr. Willson in 1994.
The Company did not describe the nature of its relationships with The University of Alaska or Great Northern Energy. Would it be participating in the “Clean Coal Demonstration Project?” As best we can determine, the University’s web site does not identify Silverado as a member of that project’s “team.” Does that mean Silverado is working with the University in some other capacity? These details are not included in the Company’s press releases or public filings.
The May 4th press release boldly predicted that the fuel would position the Company “as a world leader in the commercial development of such fossil fuels not only in Alaska but in other areas of the world.” How does Silverado’s LRCWF differ from low-rank coal-water fuels being developed by its competitors? At the time, Silverado didn’t say. The Company did, however, take the opportunity to remind investors that its gold mining division continued to have “an ever-growing significant gold presence with a current estimated value of close to ($500 million).” That estimate stands in stark contrast to the Company’s Form 10-K Annual Report for the year ended November 30, 2000. In that report, auditors valued the Company’s mineral properties at $1.2 million, and all of its assets at about $2.3 million.
Just days later, on May 8, 2000, the Company issued a press release describing the process for producing LRCWF and explaining that the fuel would be used in industrial and utility boilers and furnaces. According to Silverado, the new fuel would “decrease the cost of world heat and electrical energy generation in a safe and environmentally friendly fashion from production through end use.”
What was the basis for such lofty expectations? The Company did not elaborate on its earlier statement that the process had been tested in pilot plants in Australia, Japan and the U.S. Who conducted those tests? What were the results? What standards were used? Was an independent third-party involved in the testing? The press release did not provide such details. |
